The parents of a student who sat A-levels this year and attended an average cost boarding school from the age of seven will have paid nearly £378,000 in fees over their child’s school life. That could rise to over £825,000 for a child starting the same journey today. The parents of a day school student will have paid nearly £186,000 – set to soar to more than £413,000. And these are average fees – some schools will charge much more.
The figures assume school fees rise by 5% a year. This year fees rose by 5.6%. Though this is below the rate of inflation currently, Weatherbys’ research shows that over the school life of the leaving class of 2023 fees have risen by 1.4 times the average rate of inflation. The removal of the VAT-exempt status of private schools adds another potential 20% to bills.
Shirley Coe, Senior Private Banker at Weatherbys Private Bank, said: “Over the long term, private schools have traditionally raised fees beyond inflation, and parents need to be prepared for that. They also have to prepare for the very real threat that VAT will be added to the bill. And that’s on top of extras such as uniforms, sports activities, school trips or music lessons – we usually suggest parents earmark another 10% for these.”
She added: “Educating your children privately is a big commitment. It’s no use having your son or daughter about to skip off to school in their first uniform without you having a plan for how you’re going to meet the fees. Taking a child out of their school once they’re settled can be seriously disruptive. Parents need to know what they’re letting themselves in for financially before committing, and most will need to plan for it.
“Inflation is a serious challenge now to many families who have been given money up front or saved in advance for school fees. Generating an inflation-busting return of 10% on savings earmarked for schooling is aggressive and involves risk. Add in a potential extra 20% because of VAT and that will be enough to tip many families out of the private system.”
Clare Munro, Tax Adviser at Weatherbys Private Bank, said: “For many families private schooling will be possible only with the support of grandparents. They also need a realistic idea of the fees before agreeing to help – you very quickly lose a grasp of the costs once your own children have left school, and these numbers could be a shock. For grandparents there could be an opportunity to integrate some intelligent inheritance tax planning into the way they pass on the money, using trusts, family investment companies or bonds, but that requires careful planning and thinking ahead.
“The parents who feel the imposition of VAT most are likely to be those professionals paying fees out of income. Most will still have to pay mortgages, which may have risen substantially, and all their other living costs. School fees are an optional extra. You’re paying that over a long period and have to hope your employment is secure and salaries rise at the same rate as school fees do.”
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